UK: Warm weather boosts beer sales 10% for SABMiller

Brewing giant SABMiller said that warm weather bolstered organic sales of beer 10%, while its acquisition of Bavaria pushed volume growth up 23% in the year to March, according to company’s news release, May 17.

The company brewed and sold 216-million hectolitres of beer during the period, adding 22% to revenue to reach $18,6bn from $15,3bn. Operations generated more than $4bn in cash. Basic earnings a share rose 5% from 105c to 110,2c. Chief financial officer Malcolm Wyman said top-line growth and efficiencies had aided the company’s margin growth, which moved up 20 basis points.

Europe, South America and Asia all contributed to a rosy picture, with the only blot on SAB Miller’s copybook being North America, where it had to absorb input cost increases, which filtered through to its bottom line.

Chairman Meyer Kahn said European operations had “confused the critics and cynics”, and showed the group’s sixth successive year of double-digit earnings growth with volume up 11,1%.

In Latin America, he said, volume growth was ahead of expectations as the company wrapped up integrating Bavaria. On a pro forma basis, South America saw volume growth of 11,9%, while Africa and Asia saw a 26,4% increase in beer volumes. SABMiller is now the largest brewer in China.

SA, which makes up 31% of group profit, saw volumes rise 2,3% thanks to favourable weather, Khan said.

SABMiller would spend $1,7bn in the next financial year in South America, on a new brewery in Russia, a local container upgrade and increased capacity in India, where it was struggling to keep up with demand. The brewer was investing to drive future growth and intended rebuilding its “premium momentum” in SA, said Wyman.

CEO Graham Mackey said brand distinction in South America and Europe was paying off. The group and the company were broadening its premium presence in the US and aimed to migrate to higher margin areas.

In SA, South African Breweries (SAB) intended to launch several more brands in the next 12 to 18 months, although MD Tony van Kralingen did not say how many, or which brands would be introduced to the local market.

The company recently launched a new premium brand, Hansa Marzen Gold, which would be available nationwide in mid-June.

Van Kralingen said it was vital for the company to build a range of premium brands to allow consumers choice. Hansa, Hansa Marzen Gold, Peroni Nastro Azzurro and Miller had seen good runs, he said.

Miller was growing at 20%, while Peroni’s recent launch as draught in pubs where Amstel had been available on tap accounted for more than 40% of previous Amstel sales.

Amstel, which accounted for about 9% of local beer sales, was removed from SAB’s portfolio in March when Dutch brewer Heineken cancelled the distribution agreement.

An analyst said the company would have to leverage its local strengths in the beer market as it went head-to-head with a brand it used to house. SAB’s previous virtual monopoly of the SA beer-drinking market would come under pressure as Amstel is expected to be relaunched into the market in about September.

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